PERSPECTIVE ON ISRAEL : Bush Betrays His Own Peace Plan : It’s up to Congress to keep our pledge on the loan guarantees and restore our posture as a reliable arbiter.

There is reason to be optimistic about the prospects for peace in the Middle East. Throughout the last few months, Secretary of State Baker James A. Baker III has traveled thousands of miles in search of a workable formula for peace negotiations. Cashing in on our enhanced credibility from the unique U.S.-Israeli-Arab alliance against Saddam Hussein, Baker received commitments from all of the major parties to attend a regional peace conference next month.

Unfortunately, a new stumbling block to peace has now emerged. It is not a new demand by one of the partisans but by the President of the United States.

Free emigration has been a bipartisan U.S. policy for decades. At issue now is when and whether the United States should provide Israel with loan guarantees to assist in the absorption of refugees from the Soviet Union and Ethiopia.

There are now more than 350,000 refugee immigrants in Israel, and by 1995 that number is expected to top 1 million. Absorbing such a massive immigration has placed tremendous pressure on Israel’s economy as it seeks to provide food, shelter, clothing and other essential services for these new arrivals. To ease the burden, Israel has requested loan guarantees from the United States. Not grants, not loans, but guarantees to a country that has an exemplary credit record because it has repaid every financial obligation owed to the United States. These guarantees, if structured as called for by legislation introduced in the Senate, will fulfill Israel’s request without costing the American taxpayers a single penny.

In a press conference on Thursday, President Bush explained that he wanted a 120-day delay in Congress’ consideration of the guarantees “because we must avoid a contentious debate that would raise a host of controversial issues, issues so sensitive that a debate now could well destroy our ability to bring one or more of the parties to the peace table.”

The President has precipitated the exact debate he sought to avoid. His high-profile campaign to torpedo the guarantees is irresponsible and counterproductive to the peace process.

Until last week, the President had agreed on the urgency of providing these humanitarian guarantees. On July 1, he stated that there should be no “quid pro quo” for these guarantees and no “linkage” to any other issues.

Now, the President’s call for a four-month delay is a damaging reversal of that policy. It significantly harms the prospects for peace and would create a hardship that punishes the refugees.

It is ironic that only eight months ago Israel proved once again that it was America’s one true friend in the Middle East by adhering to our requests in exercising extraordinary restraint as Iraqi Scuds rained down on Israel’s civilian population.

The President’s action threatens our already shaky credibility as an honest broker for peace. How can the United States be viewed as an impartial negotiator when the Administration continues to sell arms to the Saudis despite their continued adherence to the Arab boycott of Israel, and fails to criticize Syria’s Hafez Assad for his brutal absorption of Lebanon, while at the same time denying Israel humanitarian aid?

The President is once again engaging in sledgehammer diplomacy in the Middle East--a practice that in the past has diminished the prospects for peace and yielded the exact opposite result the Administration was seeking to achieve. Late in 1989, Secretary Baker labored mightily to move the peace process forward. Prime Minister Yitzhak Shamir made it clear that he would be receptive if Israel received certain assurances from the United States. At that critical juncture, President Bush departed from traditional U.S. policy by indicating that he viewed Israeli settlements in East Jerusalem in the same light as he viewed Israeli settlements in the West Bank. This cast doubt on the U.S. position that Jerusalem would remain undivided. The result: no peace process and a collapsed Israeli coalition government.

Denial of the loan guarantees could deal a damaging blow to the most extraordinary opportunity for peace in the Middle East. To succeed, it is imperative that the United States be perceived as a reliable and credible arbiter by all of the parties. This means that it cannot be viewed as undermining the confidence of our most important ally in the region--Israel.

It is now up to Congress to restore Israeli confidence in the United States’ as an impartial broker for peace. If the President truly wishes to avoid an acrimonious debate and move the peace process forward, he should allow the loan guarantees to go ahead, provide the humanitarian aid that Israel so desperately needs, and deal with all of the parties in the process in a fair and responsible manner.